On the shores of the Caspian Sea, Baku is welcoming leaders, climate activists, civil society members, and negotiators from over 200 countries with heightened anticipation around setting more ambitious climate finance targets through the proposed New Collective Quantified Goal (NCQG).
The agenda aims to revitalise global climate finance commitments, yet concerns loom over the pace and scale of progress. The stakes are especially high for the world’s most vulnerable nations, which continue to bear the brunt of climate impacts.
Historically, high-emitting developed countries have taken nearly half a century to approach net-zero targets. Meanwhile, highly vulnerable and emerging economies, like India, are racing to meet these same targets in just over 25 years, underscoring a stark disparity in global climate commitments.
As COP 29 (29th Conference of the Parties) deliberates, two critical issues dominate: the establishment of the NCQG, which is seen as essential for the future of the Paris Agreement, and the operationalization of the Loss and Damage Fund. While hopes are high, frustrations simmer over the perceived delay in delivering the long-promised funds, which many believe are decades overdue.
The success of COP 29 rests on the buzzword “climate finance,” but will it be mainstreamed?
COULD COP29 DELIVER?
Across the agenda, countries are united on some issues and divided on others, but the only unanimous realization is “loss and damage.” Though COP 27’s adoption of the Santiago network was a long-awaited move, developed countries remain hesitant with implementing the loss and damage facility, as it could expose them to liability claims.
While negotiations on loss and damage remain challenging, there is progress on mitigation, particularly around carbon markets. Article 6 of the Paris Agreement has greenlit a global carbon market. Despite essential frameworks in place since 2022, the UN-supervised carbon market faces challenges. The key issue with carbon markets is accounting. As COP 29 progresses, optimism grows that a global carbon trading mechanism could be a reality, with the first UN-sanctioned carbon credits available in 2025.
Article 6 negotiations, particularly Article 6.4, represent a major step forward, potentially reducing the cost of implementing national climate plans by $250 billion annually through cross-border cooperation. But much more remains to be delivered. Can COP 29 stand up to this test? Only the coming days will tell.
As climate-vulnerable countries approach adaptation thresholds, COP 29’s outcome must deliver true solidarity and equity.
For countries like India, consolidating private sector investments to leverage recent developments and mainstream home-grown frugal and clean innovations is crucial. Experts and policymakers emphasise the need for greater involvement from international public finance institutions and a larger role for the private sector.
Mainstreaming a public-private-philanthropic blended model needs more momentum. Blended finance facilities can be especially effective for climate action by de-risking investments and catalysing private capital into climate-resilient projects. For example, the USAID-supported SAMRIDH Blended Finance Facility, implemented by IPE Global, demonstrates how this model can address financing gaps. Primarily focused on healthcare resilience, SAMRIDH’s approach of combining grant funding with commercial capital has mobilised over $350 million in private sector investments. Similar mechanisms could be designed for climate projects, bridging the climate finance gap in developing countries.
For developing nations, such financing mechanisms could be transformative, but they require clear commitments and frameworks from COP29.
As COP 29 marches on with a hope-filled but nebulous agenda, ignoring urgent warning signs will leave climate-vulnerable countries frustrated and anxious.
While it may be over-ambitious to expect a resolution to the multi-decadal facets of the climate crisis at Baku, COP 29 should deliver on climate finance through the NCQG by repurposing developmental assistance. Carbon markets, if consensus is reached, could be one of many ways to achieve the NCQG.
Amid urgent climate needs and geopolitical tensions, COP29’s success depends on tangible progress in financing climate action and supporting those most affected by the climate crisis. Whether the summit can truly deliver remains to be seen, but the world is watching closely.
(Abinash Mohanty is Head of Climate Change and Sustainability practice, and an expert reviewer of the IPCC-AR(6), and Himanshu Sikka is the Chief Strategy and Diversification Officer – at IPE Global, an international development organization. The views expressed are their own.)
